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Sandvik released a fairly solid set of numbers. The impact of acquisitions is relatively significant, as expected. SMT, to be distributed to shareholders, is now reported as discontinued operations. The short to mid-term macro outlook is getting more cloudy. We will fine-tune our numbers (exact impact of M&A and lower short-term organic growth).
Companies: Sandvik (SAND:STO)Sandvik AB (SAND:OME)
The group released FY21 results which came out in line with forecasts The Mining and the Metals divisions will benefit from a rather strong order-intake Net debt is still low despite acquisitions The group looks set to reach its mid-term targets We will upgrade our forecasts and valuation after this release
The Q3 21 numbers came in slightly above expectations The order-book rose markedly while logistics issues weighed on revenue growth Margins proved rather resilient, even if a tick lower than in H1 Even if the group does not issue any guidance, we are reasonably comfortable for Q4
The performance in H1 21 came out in line with expectations The Q2 21 numbers were very similar to Q1’s at the top line and profit levels The group still mentions some potential bottlenecks in its operations We will not change our numbers much after this release
Q1 21 numbers came in line with expectations Margins are on the rise, after the weaker FY20 SMT is still under pressure Some bottlenecks may weigh on growth in the next quarters though No big change to our numbers at first glance, but we remain cautious on organic growth going into Q2/Q3
FY20 results were more or less in line with consensus* The Machining Solutions and Material Technology segments are still under pressure The Mining business is doing well, particularly in terms of orders received The balance sheet remains very healthy thus a SEK2.00 extraordinary dividend on top of the SEK4.50 ordinary one We do not expect any major change to our forecasts
Companies: Sandvik AB
Q3 shows an (expected) rebound vs Q2 In particular, Mining&Rock Technology did quite well in the quarter The other divisions are still suffering The recent share price performance leaves little room for a significant upside
Q2 was tough and the outlook not very inspiring The group’s exposure to Aeronautics and Automotive suggests there is still some way to go in terms of recovery In this context, the strength of the balance sheet is a clear asset We expect corporate action and asset rotation to continue to boost the group’s businesses
Q1 20 is of course down due to the COVID-19 crisis Despite the lack of guidance, Q2 is set to be worse, notably in SMS However, we like the margin resilience and ongoing cost-cutting programmes The clean balance sheet is a clear asset in these troubled times We will fine-tune our numbers, with little impact on the valuation in our view
FY19 numbers were broadly in line with our and the street’s expectations. The long-cycle businesses have been doing well, while the short-cycle ones are still under pressure. Visibility remains low for the latter, explaining our rather cautious top-line expectations going into FY20. The separate listing of SMT will be another focus for investors in the current year (c.15% of total revenues).
Q3 19 numbers well in line with H1 19 numbers. Some expected one-offs (efficiency measures), all booked in Q3. The long-cycle business is going well, while the short-cycle one shows further weaknesses. All in all, no major changes in our numbers to be expected.
Q2 results are very decent, and margins remain high However, the order intake was a bit weak in the quarter, due to SMT and SMS The balance sheet remains very clean, which is not a surprise At the end of the day, the stock is likely to be capped before visibility improves on the macro front
- the Materials & Technology segment should be isolated - the aim is to give it higher growth prospects - a future listing is contemplated, albeit not guaranteed - this could also open the door to a disposal speculation, we believe - the impact remains small on the group’s scale
- Q1 19 in line with the (good) FY18 - The current year is unlikely to show such a high level of earnings growth. - Acquisitions will continue, since this is both the group’s model and the sound balance sheet enables it. - After the great outperformance since H2 18, we expect a more moderate one. - We’ll revisit our forecasts/valuation, which are probaby slightly too low at the moment.
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The development of a technology and innovation centre facilitates further development of Powerhouse’s DMG technology at a time when the market for synthetic fuels is evolving and as new feedstock opportunities present themselves.
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